Although not common, we are seeing more and more twenty-something’s in need of bankruptcy relief. A concern that is sometimes voiced is whether the client is too young to file bankruptcy. I don’t mean in a legal sense—anyone of legal-adult age may file bankruptcy (in fact, even someone under the legal-adult age can file bankruptcy with a representative) —but in a practical sense the client often feels like they should stick it out and see if they can solve their financial challenges without bankruptcy. They think by filing bankruptcy so young, that they are somehow doubly cursed or won’t be able to have the American Dream of home ownership. Such thinking is folly! (more…)
Archive for the ‘Chapter 7 Bankruptcy’ Category
Am I Too Young To File Bankruptcy?
Thursday, December 15th, 2011
Colorado Trap For Discharging State Income Tax In Bankruptcy
Wednesday, September 14th, 2011Even though you may be able to discharge in bankruptcy your IRS income taxes resulting from an audit, that is not entirely the case for Colorado income tax.
Generally, the bankruptcy code allows you to discharge a tax debt resulting from an audit or addition so long as the tax was assessed 240 days before the bankruptcy filing. This rule is often known as the audit rule as it allows an individual to discharge tax debt for a year that otherwise satisfies the 3 year and 2 year rules but when the IRS later assesses additional tax in an audit. For example, if you owe tax for 2007 and filed the tax return on time, that tax year is dischargeable today (2011); if the IRS audited you in February of 2010 for tax year 2007 and assessed additional tax in April of 2010, that additional tax would still be dischargeable in a bankruptcy filed 240 days after the April 2010 assessment date. (more…)
Surplus Foreclosure Funds Due Owner Exempt Under Colorado Homestead
Saturday, June 4th, 2011In the rare event (in this depressed housing market) that a foreclosure sale yields surplus funds beyond that needed to satisfy the mortgage, the prior homeowner receives those funds; those funds are protected from other creditors and the bankruptcy trustee under Colorado’s Homestead exemption. (more…)
The HOA Bankruptcy Trap, HOA Dues After Bankruptcy Are Still Owed!
Saturday, May 7th, 2011Home Owners Association dues can be a real pain in bankruptcy. Reason being, HOA dues are an ongoing, recurring expense. As such, HOA dues that come due after the homeowner files bankruptcy are still the responsibility of the homeowner. Allow me to explain.
A common scenario: Don Debtor is unable to afford his home and is allowing it to go into foreclosure. But Don also has other debts and is facing lawsuits and potential garnishments. Don got smart fast and did not agonize over the decision to file bankruptcy; he knows bankruptcy will be his ticket to debt freedom and future financial security. The problem: the foreclosure process takes many months; in Colorado, the average foreclosure takes about 9 months to complete (from the month of your first missed payment). Don’s home has a monthly HOA payment of $200 per month and he stopped paying the HOA along with his mortgage; he simply cannot afford to pay since he lost his job and is receiving only unemployment, plus he has no intention to keep the house anyway. (more…)
Converted Primary Residence To Rental, Is That Mortgage Now Non-Consumer Debt?
Thursday, April 14th, 2011Question:
How do I determine if rental property qualifies as non-consumer debt? We have read that it is the “intent” of the mortgage that matters. We rented out our former home, but refinanced before doing so. We had to use our Veterans Administration loan privilege to refinance since it was the only way to refinance and then rent out without living in the property for a specified term. We have the rental application signed before the refinance, and then a rental agreement signed 3 days after refinance. Will this fact allow our mortgage to be classified “non-consumer” debt?
Answer: (more…)
I Thought Chapter 7 Bankruptcy Stopped Foreclosure, But The Bank Foreclosed?
Tuesday, April 12th, 2011Question:
I filed for chapter 7 bankruptcy and it was discharged 11/08. I had four mortgages (owned investment property). I surrendered the properties and did not reaffirm the mortgage debt. My problem is the mortgage companies foreclosed on me even though I filed for chapter 7 bankruptcy. Now I not only have bankruptcy listed on my credit, I also have foreclosures listed. Is this standard? I thought they had to cease when the bankruptcy petition was filed. (more…)
Bankruptcy Wrinkle With Tax Returns Being Due April 18, 2011
Tuesday, March 29th, 2011For tax year 2010, tax returns are due April 18, 2011, not the normal day of April 15. Why? April 15, 2011 falls on the Washington D.C. holiday of Emancipation Day. Since Emancipation Day falls on April 15 and it is an official District of Columbia holiday, taxpayers have until April 18, 2011 to file their tax return, pay their taxes, or file an extension. (D.C. holidays are given the same credence as Federal holidays). (more…)
Can I Keep Vacation Property In Chapter 7 Bankruptcy?
Thursday, March 17th, 2011Question:
I own a vacation property, not a timeshare; if I file chapter 7 bankruptcy, will I be able to keep that vacation property?
Answer:
For such a generally worded question, my answer will be, generally no. There are two issues related to vacation properties and bankruptcy, (1) equity, and (2) expense. As an asset, if the vacation property has equity—meaning the property is worth more than what is owed—and if there is no exemption to protect that equity, the bankruptcy trustee will likely sell the property. Exemptions are laws that allow you to keep certain assets or equity in assets notwithstanding the fact that you are filing bankruptcy. However, if you can exempt the equity, then the trustee cannot sell the property. (more…)
